Rumble in retail: An emerging rivalry heats up

Thursday, May 08, 2014 - 02:30

May 8 - Amazon and Alibaba crank up the competition as traditional retailers try to keep up. Lily Jamali reports.

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Shopping till you drop is becoming so passe... as retailers try to capture more of your dollars online.
Major announcements from two rivals Thursday:
First Amazon - wading deeper into deliveries.
Want your package Sunday?
The company is expanding from L-A and New York to 15 other U.S. cities - 6 in Texas alone.
And Chinese internet giant Alibaba is joining forces with Amazon's smaller rival ShopRunner to give U.S. retailers access to China's shoppers.
Fitch analyst Monica Aggarwal forecasts online retailers posting double-digit sales growth in the next 3 to 5 years, as brick-and-mortar names continue to struggle:
SOUNDBITE: MONICA AGGARWAL, RETAIL ANALYST, FITCH RATING (ENGLISH) SAYING:
"This is just another example of how online, or Amazon in particular, is encroaching more on that space, in a space that's very mature. As they take more share, everyone else hurts if they can't adapt to that new enviornment."
Still, new data released Thursday shows traditional retailers rebounding in April.
Same store sales at several retailers were up 5.6% in April, compared to April 2013... flouting analyst expectations.
L-Brands, which owns Victoria's Secret, saw sales up 8%.
Costco was up 5%.
Aggarwal says they're making up ground after a harsh winter:
SOUNDBITE: MONICA AGGARWAL, RETAIL ANALYST, FITCH RATING (ENGLISH) SAYING:
"The first couple of months were weak because of the weather and the Easter timing shift but these numbers ended up being very strong. So we think they're going to continue to do well."
Many traditional retailers depended on promotion pricing to fight winter.
Trae Bodge, an editor at retailmenot.com, says no longer:
SOUNDBITE: TRAE BODGE, SENIOR LIFESTYLE EDITOR, RETAILMENOT.COM (ENGLISH) SAYING:
"I'm not seeing really aggressive discounting. What I'm seeing is nice conservative discounting. Between 5 and 20%."
Bodge disputes the notion that Americans have completely abandoned the shopping mall in favor of the digital space.
But she acknowledges people are depending on digital tools while they shop.
SOUNDBITE: TRAE BODGE, SENIOR LIFESTYLE EDITOR, RETAILMENOT.COM (ENGLISH) SAYING:
"We're also seeing that consumers are walking around with their smartphones and tablets in hand. They are researching as they shop and so what retailers are doing is they're adjusting to that. They're offering free wi-fi in-store. They're offering special deals that will pop up on your smart phone because they're geolocated."
She says these tools help retailers stay competitive in an increasingly crowded retail landscape.

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